Income Taxes

Many students have misconceptions or expectations about the income tax filing process. You may have heard from a friend, family member, or fellow student what the process involves. We strongly encourage you to educate yourself about Canada Revenue Agency (CRA) requirements and your responsibilities with respect to filing an income tax return.

"If you are an international student studying in Canada, you may have to file a Canadian income tax return. You must determine your residency status to know how you will be taxed in Canada" - Canada Revenue Agency

The CIE offers supportive programming to help along the way. Sign up for an info session, or speak with an international transition advisor to learn what you initially need to know in order to file with the Canadian tax system. Please note the CIE does not offer one-on-one individual income tax filing support.

The information listed here is guided by the Canada Revenue Agency (CRA – the Teaching Tax module), local tax experts and professionals, and feedback from international students.

Canadian income tax overview

The Canadian government expects its residents to ensure they are in good standing when it comes to their income taxes. This expectation is administered through the Canada Revenue Agency (CRA), which receives tax filing applications, administers tax laws for most provinces and territories, international trade legislation, and various social and economic benefit programs delivered via the tax system.

Residents of Canada determine how much they own in income taxes based on calculations over the income earned in a calendar year, i.e. from January 1 to December 31. “Residency” for CRA purposes in income tax filing is not the same as for Immigration, Refugees and Citizenship Canada (IRCC). Employers in Canada are required by law to deduct income taxes on behalf of their employed residents and then direct these deductions to the CRA.

At the beginning of employment, the employee – or residents of Canada for tax purposes – completes a federal and provincial TD1 form. The employer also deducts Canada Pension Plan (CPP) and Employment Insurance (EI) from each paycheck of the employee. This TD1 information, as well as how much a resident earned with the employer, is later compiled by the employer to produce a T4 slip sent to employees prior to the income tax deadline. Residents must ensure they are aware of this amount and pay it prior to April 30 for the previous calendar year. The CRA may accept late submissions, but there may be a penalty of interest charges on the balance owed.

In a simplified example, a student may receive their T4 slip(s) in January or February in 2017. A student who earned an income anytime from January 2016 to December 2016 will file their income tax application using this T4 slip as well as other relevant tax documentation on or before April 30, 2017. For common basic income tax purposes of most international students who do not earn large amounts of income, many students do not have large balances of tax owed when they file taxes. In these simple cases, students may file taxes past April 30, but it is recommended to do so beforehand because of the many supports for filing that exist prior to the April 30 deadline – what is often referred to as “tax season.”

Even though students may not earn income or owe income tax, as an international student you may benefit from filing your application with the CRA because you may get a refund, a GST/HST credit, and receive child tax credits or subsidies. One major benefit is when you may earn much more income later on (e.g. after graduation) and you can carry forward your tuition credits to reduce your future income tax owed.

For more information about this and other relevant information, consider attending a CIE Income Tax Information Session delivered in the winter academic term.

These supports usually serve students who often have simple income tax situations: students who make less than $30 000 annually, no or few dependents (e.g. spouse or children), modest income from a part-time job. They usually do this with students presenting their relevant tax and other documents using an electronic tax filing software.

Finding a tax professional

International students with income tax filing situations that are more complex (e.g. large income earned, investments, multiple country taxation, dependents) are strongly advised to seek paid (non-volunteer) professional help from certified tax experts. These professionals often include accountants or tax lawyers. There are also income tax businesses who have trained tax preparers who do not have registered designations but usually have experience using tax software.

In your search for a professional tax expert, be sure to take the time to find someone who has experience with your financial history (e.g. being a student, international, holding part-time job, dependents). Many experts are reliable and qualified. However, it is important to do your research, ask questions about their service and determine if that person is the best for you.

As with any professional service you may seek out, you often get referrals from a friend, relative or someone you trust especially when filing an income tax return. It is also a good practice to do a background check of the person or company through the Better Business Bureau. Your situation may be unique so asking about their experience, knowledge and training is important. And, be sure to request references or referrals from their previous clients.

Ask about fees for services in advance

If you believe your income tax situation is complex and cannot be handled by a volunteer, be aware that tax professionals are often more costly than attempting to file your own taxes using low cost online software. Be sure to understand their rates for charging and how their fees are broken down. Is it an hourly charge, or by the extent or complexity of your tax situation? If they give advice over the phone or email, do they charge you for these consultations?

Before signing on to have them help you, be sure to ask for an estimate.

Also, determine if the tax professional guarantees accuracy of their work, and if there is a mistake in filing your income tax application to the CRA that they will resolve the error at no cost to you.

Who is responsible for income tax filing?

Above all – whether you get a volunteer or tax preparer or professional help – be sure you fully understand the tax filing forms because, even though someone else may have done the work of the calculations, you are ultimately responsible for your own tax return. Residents of Canada are responsible for knowing their income tax status and how much they owe.

If you have questions or concerns, you can call the CRA’s International tax and non-resident toll free number: 1-800-959-8281.

Be sure to visit the CRA website that has specific information for international students.